Source: https://mailchi.mp/9868f5ec9741/the-owl-housing-starts-jump-up-again-in-august?e=6f1f3fb3a5
Higher levels of supply and stagnant house prices in Alberta’s main cities aren’t doing much to slow housing construction in our province.
In August, builders started construction on 33,270 new homes. August’s pace of building was 11 per cent greater than July and two per cent greater than the same month a year earlier. August’s figure is adjusted for seasonality and shown at an annualized rate (that is, it is the number of new homes that would be built in a full year if the same pace of activity was sustained for 12 months).
Housing starts are a great measure of economic performance. As more people work, earn money, and feel confident about their jobs, they buy new houses and condos. Given that housing starts are on the rise and well above the 12-month average, we should feel optimistic about the economy. However, when we dig into other housing data a little more closely, there are a few surprises that suggest housing starts could begin to trend lower.
In Edmonton and Calgary, for example, both cities are experiencing high levels of inventory, lower sales activity and house prices are flat, too. Normally, weaker sales activity and a falling price would halt construction on new homes. Albertans are also having to deal with costlier borrowing and stricter lending rules that were introduced at the beginning of the year.
The combination of lower sales activity, falling prices, more expensive lending and harder mortgage qualifications are doing little to stop the pace of new home construction, at least for now. In the coming months, however, we can expect housing levels to begin to trend lower.
About Don Cholak
